Correlation Between Magellan Financial and Carlton Investments
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Carlton Investments at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Magellan Financial and Carlton Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Financial Group and Carlton Investments, you can compare the effects of market volatilities on Magellan Financial and Carlton Investments and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Magellan Financial with a short position of Carlton Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Carlton Investments.
Diversification Opportunities for Magellan Financial and Carlton Investments
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magellan and Carlton is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments and Magellan Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Magellan Financial Group are associated (or correlated) with Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Magellan Financial i.e., Magellan Financial and Carlton Investments go up and down completely randomly.
Pair Corralation between Magellan Financial and Carlton Investments
Assuming the 90 days trading horizon Magellan Financial Group is expected to under-perform the Carlton Investments. In addition to that, Magellan Financial is 2.26 times more volatile than Carlton Investments. It trades about -0.08 of its total potential returns per unit of risk. Carlton Investments is currently generating about 0.11 per unit of volatility. If you would invest 2,997 in Carlton Investments on August 25, 2024 and sell it today you would earn a total of 68.00 from holding Carlton Investments or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. Carlton Investments
Performance |
| Timeline |
| Magellan Financial |
| Carlton Investments |
Magellan Financial and Carlton Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Carlton Investments
The main advantage of trading using opposite Magellan Financial and Carlton Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Carlton Investments can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carlton Investments will offset losses from the drop in Carlton Investments' long position.| Magellan Financial vs. National Australia Bank | Magellan Financial vs. National Australia Bank | Magellan Financial vs. Westpac Banking | Magellan Financial vs. National Australia Bank |
| Carlton Investments vs. Infomedia | Carlton Investments vs. Janison Education Group | Carlton Investments vs. G8 Education | Carlton Investments vs. Autosports Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |